SUSTAINABILITY
Definition A sustainability gap can be definefd as failure by a company to plan for the future, meaning that everyday management consits solely of decisions concerning present operations. Characteristics: ''' *Company only has short term plans *No awareness of changes in the periphery that might disrupt their business model. *No reactions to changes. This gap is obviously relevant for a company as it determines if a company can stay in business for a prolonged period or not. If a company has no idea what to do in the future, i.e. how they want to develop the business, where to invest the money, how to invest the money, and so on, then they will soon find themselves in a mature/declining market without any profitability, and without the ability to come up with new ideas. It’s important to have plans for the medium and long term, to be able to avoid a sustainability gap. Diagnostic To determine whether or not a company is facing a sustainability gap, a series of questions can be asked: Are your innovation efforts focused on fixing the past, enjoying the present or saving the future of your organization? Is your team aware of changes in the periphery that sooner or later might disrupt your business model? Are you anticipating change or reacting to change? Case examples '''Blockbuster Blockbuster was one of the leading chains in renting out movies and videogames; it was a big recognizable brand that held great value. However the big video rental giant has decreased in value and been passed by popular video on demand services. It is possible to indicate the big failures that Blockbuster made to lose their position. First they implemented a controversial no-late fee for customers that were late in returning their rentals. This to make the video renting look more flexible, however it just ended with the company losing money and the rentals did not increase. The biggest mistake blockbuster made however was when the management did not manage to foresee the future of online rentals, and the management declined to buy Netflix in year 2000 for the amount of 50 million dollars. Today Blockbuster is valued to 850 million and Netflix is valued to 1.4 billion dollars. By looking at the failure of blockbuster and comparing that to the diagnostic questions it can clearly be see that blockbuster was lacking. Especially with the case of not buying Netflix. *The management was clearly not designed to adjust to changes in the industry. *They did not challenge the industry with bringing in this new technology. *They also failed to foresee the strategic risk and create a diversified portfolio by investing in Netflix or any other online video rental. Solution: Escaping the gap Besides the question above, a good idea for a company is to take a look at the category maturity life cycle and the the growth materiality matrix. These tools will help a company to evaluate if they have a sustainable business and gives a concrete see on what they need to change in an easy to use way. In the life cycle it is able to known where are the current products of a company are at. This helps to evaluate what kind of strategy can be implemmented before they become non-profitable. The growth matrix, also known as Ansoff matrix, helps identify what are the ideas and products on the rise and the areas where is more atractive to invest in the future. Define goals and guidelines To be successfull through out the years, the first essential key is to define goals and guidelines for the company. Define the project by planning its evolution over time in several years. There are four levels of targets : #Overall company performance targets (Short and longer term revenue and profits goals.) #Specific targets for each growth type (How much each will contribute to the overall targets?) #Operational targets (Define in units, How much I want to produce?) #Strategic oportunities areas (Define a list of oportunities for the company) This planning must be flexible because it is certain that changes will be operated in a world that is constantly changing. Managers should not be afraid to deviate from their original plan even radically. ''' Managing innovation portfolios' Many companies are only dedicated to their short-term performance, forgetting to invest long term. It is essential to prepare parallel innovations of the current optimization. - mid-term : growth business with expanding existing and building new business. An adjacent innovation. - long term : future business, place small bets on emerging oportunities. 'Evolve with the environment' To ensure sustainability, it is essential to anticipate the future to maintain the success of the company over time. In this context it is advisable to implement : - - team specializes in future trends through research and surveys in order to anticipate the future. - - conduct a survey of all employees of the company to bring up new ideas. If it is possible to pred market developments, it is easier to adapt to become precursor of change. 'Diversify your portfolio''' Having a diverse portfolio, i.e. having a constant stream of new products, new segments or new businesses will allow your company to not rely on just one area. Therefore, if said area will move into the mature, or maybe even declining business life cycle, your company will have other areas to produce revenue. References Anthony D., Scott, and David S. Duncan. Building a growth factory. Boston: Harvard Business Review Press, 2012. Print. Category:INNOVATION GAPS